WALL STREET OUTLOOK Higher on strong results led by Apple, 3M UPDATE
LONDON (Thomson IM) - Wall Street is set for gains as strong earnings from
Apple and 3M combined with a narrower-than-expected loss at Ford continued a run of solid quarterly results that lifted the Dow Jones Industrial Average above
the 13,000 level for the first time yesterday.
According to spread bettors IG Index, the Dow industrials are expected to
open up 16 points higher at 13,106.
"The market's being cheered on by good earnings," said Peter Cardillo, chief
market economist at Avalon Partners. "Obviously expectations for earnings and
guidance were too low."
Cardillo said the strength in quarterly results is helping minimise concerns
about rising oil prices and a weak dollar.
Yesterday, stocks surged on a raft of strong quarterly results and a
sharper-than-expected increase in orders for durable goods.
The Dow rose 136 points, or 1.1 pct, to 13,090. The blue-chip index has
risen in 18 of the past 20 sessions and gained more than 780 points in that
time.
A trio of Fed speakers and the latest weekly jobless data will provide the
economic backdrop to another busy day on the earnings front.
The number of people filing new claims for unemployment insurance fell more
than expected, hitting a low not seen in a month, the Labor Department said.
First time claims fell 20,000 to 321,000 in the week ended April 21, lower
than the 330,000 new claims economists had expected.
Dallas Fed president Richard Fisher speaks on the economy at 5.15 BST while
Fed governor Frederic Mishkin goes before the International Monetary Fund to
talk about globalisation and financial development at 5.30 pm BST.
San Francisco Fed president Janet Yellen speaks after the market close.
Oil edged lower amid reports key producer Iran and the EU had made some
progress in talks aimed at settling a dispute centring on the Persian Gulf
country's nuclear enrichment activities.
But analysts said prices would not retreat much, as the market remains
underpinned by declines in US gasoline stocks ahead of the peak demand summer driving season.
New York light sweet crude for June delivery was last down 29 cents at 65.55
usd a barrel.
The US dollar gained against the Japanese yen amid expectations the Bank of
Japan will leave interest rates unchanged when it announces its decision
tomorrow. The greenback also made modest gains against the euro and sterling.
At last check, the dollar was up 0.6 pct at 119.29 yen. The euro fell 0.2
pct to 1.3614 usd, while sterling gave up 0.2 pct to trade at 1.9970 usd.
In company news, Apple's forecast-beating earnings are set power gains in
the technology sector. The company's first-quarter profit grew 88 pct on strong sales of its
ubiquitous iPod digital music player and Mac computers.
Investor optimism in the trendsetting company may have also been bolstered
by a vote of confidence the board of directors gave Apple's chief executive
officer, Steve Jobs.
The board on Wednesday defended the iconic CEO from new accusations by a
former Apple executive, who alleged Jobs may have had a more significant role in
the company's backdating of stock options than previously stated.
Apple shares were up 8 pct at 102.93 usd in pre-market dealings, putting the
company on track to break the 100 usd mark in official trading.
On the Dow, 3M shares rose 4 pct to 80.05 usd in pre-market trade as the
maker of adhesive and Post-It note maker posted first-quarter results that
breezed past analyst expectation.
Exxon Mobil, another Dow member, also tacked on 0.6 pct after the oil giant
posted a better-than-expected first quarter, saying higher refining, marketing
and chemical margins were partly offset by a decrease in crude oil and natural
gas prices.
Total revenue for the quarter was 87.22 bln usd, which was lower than the
88.98 bln usd seen last year, while capital and exploration costs edged down to
4.28 bln usd from 4.82 bln usd a year ago.
Programmable chip-maker Xilinx Inc's better-than-expected results will lend
further support.
Elsewhere, shares in Ford Motor Co surged 8.1 pct to 8.52 usd in pre-market
dealings after the car maker's first-quarter loss narrowed versus a year ago.
Revenue also rose rose to 43 bln usd from 40.8 bln usd last year.
Shares in Wendy's International Inc shot up 11 pct to 38.28 usd in
pre-market trade as it used its first-quarter results to announce that it was
forming a special committee of directors to consider a possible sale of the
fast-food group, among other options.
Bristol-Myers Squibb said its first-quarter profit fell 3.4 pct on a drop in
sales of several key drugs, but its earnings still beat Wall Street
expectations. It also said interim CEO James Cornelius has been elected to the
job until the annual shareholders meeting in 2009.
Aetna shares could see early gains after the health insurer posted
forecast-beating results and raised its annual operating earnings per share
estimate.